Contractors are increasingly rejecting tenders due to concerns over risk, according to Gleeds.
The consultancy said that 97 per cent of the contractors surveyed for its latest UK Construction Market Report had declined tenders in the second quarter of 2025 – an increase from the 75 per cent in the first three months of the year.
“Concerns over the proposed conditions or risk profile is the main reason cited by respondents,” the report said, with 68 per cent of those surveyed noting a reduced appetite for risk from contractors in the three months from 1 April.
It comes as around two-thirds of construction professionals surveyed said inflation and interest rates were one of their three biggest concerns, with 17 per cent saying it was their single biggest concern.
Gleeds said it expected tender price inflation to be 3.5 per cent in 2025 but warned that “factors such as size, sector, specification and procurement and tendering strategies can significantly influence tender prices”.
It said the Bank of England’s statement that interest rates should continue to fall will be widely welcomed, adding that the other most-cited areas for concern were global tensions, and insolvencies and supply chain capacity.
“[Survey] comments suggest that a combination of these factors are adversely affecting project viability across multiple sectors,” the market report said.
“With material, labour and wider overhead costs impacting already tight margins, a growing aversion to risk, in parallel with shrinking contractor capacity across the market, is further affecting supply chains.”
Construction remains the sector with the highest rate of insolvency, with 4,111 business failures in the 12 months to March 2025, according to the Insolvency Service. Gleeds said almost a quarter of its respondents said projects were affected by insolvency in the the second quarter of 2025.
Global tensions also remain a concern, with builders worried that investors will be spooked by geopolitical tensions, economic fluctuations or any protectionist policies unveiled by the US government.
“In such a cost-sensitive environment, survey feedback points to a market that is still active, but with some clients now favouring two-stage procurement for greater certainty, as well as more feasibility and early-stage cost plans in place of competitive tendering and post-contract work,” Gleeds’ latest market report said.
Data published by Barbour ABI and the Office for National Statistics in May suggested that construction orders books increased by 26 per cent in the first quarter of 2025, compared with the last quarter of 2024.
However, data subsequently published by Barbour ABI and S&P Global suggested a sharp deceleration in the increase in value of construction contracts awarded in April and May.
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Will Ing